Fiscal cliff: John Boehner proposes 'Plan B' to prevent tax hikes

Republicans moved to force President Barack Obama's hand in the "fiscal
cliff" negotiations on Tuesday by proposing a "Plan B" if the
White House refused to limit tax rises to those earning more than $1
million.

With only two weeks until the onset of $600 billion in automatic tax rises and spending cuts that could trigger a new recession, the White House remains locked in talks with Congress to reach a deal before time runs out.

In a move widely seen as act of brinksmanship, John Boehner, the Republican Speaker of the House, laid out an plan to prevent tax rises for the middle class in the event that negotiations break down.

"At the same time that we're going to continue to talk to the President, we're going to also move to Plan B," Mr Boehner said as he announced proposals to keep taxes from going up for individuals making less than $1 million a year.

He stressed that it would be "better for our country" to reach a broad deal with Mr Obama but said a "back up plan" was needed as the US edges closer to the edge of the cliff.

The Republican plan would not address the $100 billion in spending cuts due to begin in January and the White House last night dismissed the proposal as political manoeuvring.

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Jay Carney, the White House press secretary, said tax rises limited to those making more than $1 million was unacceptable and that the Republican plan "doesn’t ask enough of the very wealthiest in taxes".

Republicans in the House of Representatives could pass Mr Boehner's plan as early as this week but the White House said it would call on its allies in the Democrat-controlled Senate to block it.

"This is more a posturing move than a serious proposal," said Matt Bennett, vice president of Third Way think tank. "If this moved ahead it would fool no one and be an exercise in gamesmanship."

While the two sides spar in public, negotiations are continuing at pace and analysts are increasingly optimistic that a deal will be reached by the end of the year.

"The chemistry of the talks has changed in the wake of the tragedy in Connecticut and everyone realizes that the American people expect them to reach a deal," Mr Bennett told the Daily Telegraph.

Mr Obama began the talks calling for $1.6 trillion in new revenue and that taxes go up on individuals making more than $250,000. Since then he has watered down his demands to $1.2 trillion and tax hikes only on those making more than $400,000.

In return, Mr Boehner crossed a once-unthinkable line for Republicans - accepting that tax rates will go up on the wealthiest as part of an effort to generate funds needed to close the government's spending deficit.